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"The Constant Challenge" at eBay

Online auction site eBay (EBAY) just finished its annual member conference, eBay Live!, on June 26, bringing together more than 10,000 of its sellers and buyers in New Orleans. It's a chance for the most fanatic of eBay's 45 million active members to trade ideas, take classes in how to sell better, and lobby the online marketplace's staff for changes.

Part love fest and part bitch session, the show is an annual highlight for eBay Chief Executive Margaret C. Whitman, who takes the opportunity to mingle with the masses. As she gazed down on the show floor, Whitman shared her thoughts with BusinessWeek Silicon Valley Bureau Chief Robert D. Hof about how she copes with the contentious hordes on eBay and why, despite rumors that she might leave the company before long, she's happy with her job. Edited excerpts of their conversation follow:

Q: Is it difficult to manage sellers, many of whom seem to have little business experience?

A: Actually, most of these sellers know more about eBay than most [eBay] employees. They use it every single day. They're the experts. Folks have basically quit their day jobs to sell full-time on eBay. They do eBay before their kids come home from school. The businesses that have been built on this platform are remarkable.

Q: Some veteran sellers are fed up with eBay's constant tinkering with the site. How are you responding?

A: The community right now has seen a lot of change. We probably need to slow down that pace of change just a tad. It's hard for folks to adapt to so much change. That said, the underlying technology is changing, and the competitive landscape provides some new challenges. We want to make sure we strike the right balance between keeping pace with what's new and what's important in online commerce, and at the same time empower the people who are making their living on eBay.

Q: In particular, some sellers are very unhappy about how eBay recently changed the organization of several product categories, which made it tougher for buyers to browse and thus hurt sales in some categories. Did their complaints hit home?

A: Absolutely. We think books and apparel went really well, helping buyers search for specific products more easily. Music was pretty good, too. As we ventured into pottery and glass, I think we may have moved too fast. There are still a lot of consumers in pottery and glass who like to browse, and that was disrupted somewhat by the category changes. We're going to slow down [those types of changes] until we determine the exact business impact on our sellers.

Q: How do you balance the competing demands of buyers and sellers?

A: It's an art, not a science. We've gotten pretty experienced at it now. We can anticipate the reaction because we ask both buyers and sellers. Then it comes back to: What's the right thing for the marketplace? Sometimes we come down on the side of the sellers, sometimes we come down on the side of the buyers. We really think hard about it.

We rarely make a big change without running a beta, where we run a new site in parallel with the existing one. We never used to do that, because we didn't have the technical capability. We do now.

Q: On eBay's own discussion boards, sellers aren't shy about pointing out what they view as problems. How do you sift through those complaints to determine what's really important?

A: The scale of this user base is so large that part of [managing it] is being able to parse what one ought to do based on the feedback. We have community development teams who know each discussion-board poster.

We think most of our sellers are very happy. But they're like the silent majority. We do extensive surveys of the community. For example, we surveyed 50,000 people on the changes to My eBay [a customized page for buyers and sellers]. About 80% liked it. If we get 80% approval, we're good to go.

Q: Members love to complain. Do you ever get tired of it?

A: No, not really. Yes, we get a lot of feedback from users, and they're not a shy group. But you know what? They're pretty happy. I just came back from an hour on the floor of the show, and people are thrilled with their eBay experience. Would they like us to make some changes on the margin? Perhaps. But the general sentiment is "this is pretty great."

I ran into a woman who said, "I really have to dial up my eBay business this summer because I have a second child going to college, and I am paying both college tuitions out of my eBay business." That's the kind of story that is the essence of this company.

Q: eBay's international business is growing much faster than in the U.S. How does that change the nature of the company?

A: It used to be that the U.S. was largely the innovation engine. Now, it is the U.S. and Germany. And Germany has a very significant say in how this platform develops. So I think that as more countries get to that scale, we will include them even more in product-development strategy.

Q: Has the proliferation of eBay around the world changed how people buy and sell?

A: I hear all the time that Germans trade on the Italy site. They may not speak much Italian, but the site is laid out the same way, so they kind of know how to do it. And it's the same with French [going to] to the Italian site, and Germans to the U.K. one. In the long run, the way the site works consistently across geographies is going to be really important to global trade.

Q: The rumor on the floor of eBay Live! is that you might leave eBay before long, possibly for Walt Disney (DIS), where CEO Michael Eisner has been under fire.

A: [Laughs] As far as I know, there isn't a vacancy at Disney. People speculate a lot. But I have to tell you, I have one of the best jobs in Corporate America. It's this unique blend of commerce and community. The community of users is endlessly interesting and endlessly surprising. That's what I love the most.

Second is the constant challenge. It is one of the fastest-growing companies of any scale. Every week, there is a different set of issues, a different challenge, something new to think about. Probably at least a couple times a week, I go, "Huh! I didn't know that."

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